European retail investment gathering pace

Preliminary analysis suggests that direct investment in retail real estate for Q2 is €3.9bn, a 29% increase on the Q1 2012 volume of €3.1bn. However, volumes in the first half of 2012 will be €7.0bn, down from €15.3bn in H1 2011, and below the H1 five year average of €10.3bn.

Geographically, as in Q1, the majority of activity remains focused on the large, liquid markets of Germany and the UK which together transacted just over 50% of total volume. Germany accounted for almost half of deals over €100m, including the purchase of the Europa Galeria in Saarbrücken by Union Investment from Credit Suisse Euroreal, for €173.5 million and Unibail-Rodamco’s €190 million acquisition of a 50% stake in Ruhr Park in Bochum..

“Germany is still high on the wish list of investors, and quality product with strong fundamentals continues to attract significant attention from numerous equity sources but the main brake acting on the German shopping centre investment market is the limited availability of core product. Several parties are looking to enter the market or expand their platform, as witnessed by Unibail-Rodamco’s strategic acquisition of a majority stake in Perella Weinberg’s JV holding in mfi AG, Germany’s second largest shopping centre group.”

Looking forward, there are several large transactions pending across Europe and new product is expected to come to the market, as the fundamentals of retail real estate investment remain intact. We therefore anticipate more activity in the second half of the year, mostly in Germany, the UK and Poland. However, last year’s total investment volume of €31.6bn is unlikely to be repeated; our revised estimate for 2012 is that volumes will not exceed €20bn.​